Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes

[Magnus]

The National Association of Realtors has reached a nationwide settlement of claims that the industry conspired to keep agent commissions high, it said Friday, a deal set to usher in the biggest changes to how Americans buy and sell homes in decades.

The $418 million agreement will make it easier for home buyers to negotiate fees with their own agents and could lead more buyers to forgo using agents altogether, which has the potential to drive down commission rates and force hundreds of thousands of agents out of the industry.

NAR agreed to abandon longstanding industry rules that have required most home-sale listings to include an upfront offer telling buyers’ agents how much they will get paid. Under a system in place for a generation, sellers have typically set buyers’ agents fees. Consumer advocates say the arrangement has prevented buyers from negotiating to save money and kept commissions in the U.S. higher than in most of the world.

The agreement is the answer to months of uncertainty and mounting legal threats to the residential real-estate industry. NAR, one of the nation’s most powerful trade groups, has been facing crippling antitrust liability since a Kansas City, Mo., jury delivered a $1.8 billion verdict against the organization and two national brokerages in October. The jury found that industry rules for how buyers’ agents are paid were keeping commission rates artificially high.

https://www.wsj.com/real-estate/realtors-settlement-change-buy-sell-homes-da45eb23?mod=hp_lead_pos1

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Positive news for consumers as this could lead to transparency in RE transactions lowering costs for both buyers & sellers. This will greatly impact anyone planning to buy or sell homes. One last step remains: This settlement needs to be approved by a federal court. Hopefully, soon.

 

[Lisa558]

The National Association of Realtors has reached a nationwide settlement of claims that the industry conspired to keep agent commissions high, it said Friday, a deal set to usher in the biggest changes to how Americans buy and sell homes in decades.

The $418 million agreement will make it easier for home buyers to negotiate fees with their own agents and could lead more buyers to forgo using agents altogether, which has the potential to drive down commission rates and force hundreds of thousands of agents out of the industry.

NAR agreed to abandon longstanding industry rules that have required most home-sale listings to include an upfront offer telling buyers’ agents how much they will get paid. Under a system in place for a generation, sellers have typically set buyers’ agents fees. Consumer advocates say the arrangement has prevented buyers from negotiating to save money and kept commissions in the U.S. higher than in most of the world.

The agreement is the answer to months of uncertainty and mounting legal threats to the residential real-estate industry. NAR, one of the nation’s most powerful trade groups, has been facing crippling antitrust liability since a Kansas City, Mo., jury delivered a $1.8 billion verdict against the organization and two national brokerages in October. The jury found that industry rules for how buyers’ agents are paid were keeping commission rates artificially high.

https://www.wsj.com/real-estate/realtors-settlement-change-buy-sell-homes-da45eb23?mod=hp_lead_pos1

---

Positive news for consumers as this could lead to transparency in RE transactions lowering costs for both buyers & sellers. This will greatly impact anyone planning to buy or sell homes. One last step remains: This settlement needs to be approved by a federal court. Hopefully, soon.

I always thought the commission-based approach was unfair. Just because a house valued at $400,000 three years ago shot up to $600,000, why does the agent get more money? It’s the same amount of time and effort to sell.

And some of the townhouses in my neighborhood that were $900,000 pre-COVID are now going for close to $1.3 million. That 6% commission (I know it’s split) goes up from $54,000 to $78,000? For selling ONE house?

 

[rightwinger]

Why should an agents fee be linked directly to selling price?
His involvement is not much more for a million dollar house than a $300,000 house

Today, a home buyer does most of the work anyway looking for houses online. They then contact an agent and say…..I want to look at these three houses.
For the seller, an agent just suggests a price and posts the property online

 

[JLW]

This commission scheme for realtors should have been reviewed and abolished years ago.

Be that as it may, the real estate commission 95% of the time does not go to one agent alone. The Selling agent splits their share with his broker and if there is a Buyer's agent the commission is then divided in half and split between the Buyer's agent and his broker.

There is and was a monopolistic aspect to these commissions because when a Seller's property is listed on the MLS, commission rates are also noted. This means that a realtor is most likely to divert buyers to properties that offer higher commission rates.

The system needs reform and at last, hopefully, it is beginning.

 

[rightwinger]

Be that as it may, the real estate commission 95% of the time does not go to one agent alone. The Selling agent splits their share with his broker and if there is a Buyer's agent the commission is then divided in half and split between the Buyer's agent and his broker.

Too many middle men